Investor dissent is brewing at Hyundai Motor

PRNewsFoto/Hyundai Motor America
SEOUL (Reuters) - A major investor in Hyundai Motor Co on Friday urged the automaker to improve its governance, as shareholders met for the first time since the Hyundai group paid $10 billion for a piece of real estate in a widely criticized deal.

The decision in September last year to buy the land in Seoul's affluent Gangnam district at three times its appraised value hit Hyundai Motor's share price and rekindled investor frustration over opaque decision-making process at South Korea's family-owned conglomerates.

In an unusual expression of dissent at a shareholder meeting in South Korea, a director at Netherlands-based pension fund APG Asset Management called on Hyundai Motor to revamp its governance structure and assign one of its external directors to "defend shareholder interests."

"I hope this incident will give an opportunity for Hyundai Motor to improve its governance structure in a rational manner," the director, Park Yoo-kyung, told the crowded auditorium at Hyundai Motor's headquarters in Seoul.

Shareholder activism is rare in South Korea despite the predominance of family-run conglomerates known as chaebol that typically trade at discounts to global peers, due in part to governance concerns. Annual shareholder meetings are usually quiet, predictable events.

After its land deal, Hyundai Motor took measures that appeared aimed at soothing investors, including announcing a share buyback and dividend increase.

Claiming to speak on behalf of other institutional investors, Park urged the company - the world's fifth-biggest automaker alongside affiliate Kia Motors Corp in terms of sales - to set up a board committee tasked with bringing governance up to international standards.

"Those proposals are not something unusual in light of global standards. But given the Korean situation, they are very innovative proposals," she said, reading a statement.